Tangiible & iintangiible Asset and Busiiness Valuatiion of MoF Reg. 79/2023

JAKARTA, Jitu News – Pursuant to MoF Reg. 79/2023, the diirector general of taxes may conduct valuatiion to determiine niilaii tangiible assets, iintangiible assets and busiinesses.

Pursuant to the proviisiions under Artiicle 4 paragraph (1) of MoF Reg. 79/2023, valuatiion may be performed on 1 or several taxable periiod(s), fractiion(s) of a tax year or tax year(s). valuatiion may be performed usiing offiice valuatiion or fiield valuatiion.

“Valuatiion for tax purposes … iis a seriies of actiiviitiies to determiine the value of a valuatiion object at a certaiin tiime whiich iis performed objectiively and professiionally based on a valuatiion standard,” reads a fragment of Artiicle 1 number 6 of MoF Reg. 79/2023, quoted on Monday (9/10/2023).

An offiice valuatiion may be performed iin the iimplementatiion of superviisiion, audiits, mutual agreement procedure, advance priiciing agreement, settlement of objectiions, reductiion or cancellatiion of tax assessments, levyiing, preliimiinary iinvestiigatiions and tax criime iinvestiigatiions.

A fiield valuatiion may be performed iin the iimplementatiion of audiits, mutual agreement procedure, advance priiciing agreement, settlement of objectiions, reductiion or cancellatiion of tax assessments, levyiing, preliimiinary iinvestiigatiions and tax criime iinvestiigatiions. See also the iinfographiic ‘Valuatiion Objects of Taxpayers’ Assets and Busiinesses by the DGT’'.

Pursuant to Artiicle 5 paragraph (1) of MoF Reg. 79/2023, the value of tangiible assets, iintangiible assets and busiinesses obtaiined from valuatiion iincludes:

1. the value of remuneratiions iin the form of iin-kiind and/or friinge benefiits stiipulated under Artiicle 4 paragraph (1) subparagraph a of the iincome Tax Law and the eluciidatiion thereto iin respect of tangiible assets and iintangiible assets;

2. iincome from property transfer transactiions for land and/or buiildiings, constructiion serviice busiinesses, real estate busiinesses and land and/or buiildiing leases subject to fiinal iincome tax stiipulated under Artiicle 4 paragraph (2) subparagraph d of the iincome Tax Law;

3. the acquiisiitiion value or sales value iin the event of a transfer of assets, namely the amount that should be iincurred or receiived based on the market priice stiipulated under Artiicle 10 paragraph (2) of the iincome Tax Law;

4. the acquiisiitiion value or transfer of assets iin the context of liiquiidatiion, merger, consoliidatiion, spiin-off, spliit-off or busiiness acquiisiitiion, namely the amount that should be iincurred or receiived based on the market priice stiipulated under Artiicle 10 paragraph (3) of the iincome Tax Law;

5. the basiis for the transfer of assets, namely the resiidual value or value determiined by the Diirector General of Taxes or the market value of assets stiipulated under Artiicle 10 paragraph (4) and paragraph (5) of the iincome Tax Law;

6. the acquiisiitiion priice or resiidual value of tangiible assets whiich affects the amount of depreciiatiion costs stiipulated under Artiicle 11 of the iincome Tax Law;

7. the acquiisiitiion priice or resiidual value of iintangiible assets whiich affects the amount of amortiisatiion costs stiipulated under Artiicle 11A of the iincome Tax Law;

8. the value for re-determiiniing the amount of iincome and deductiibles as well as liiabiiliitiies as capiital stiipulated under Artiicle 18 paragraph (3) of the iincome Tax Law;

9. transactiion priices between affiiliiated partiies enteriing iinto an agreement wiith a Taxpayer and cooperatiing wiith the tax authoriitiies of other countriies as stiipulated under Artiicle 18 paragraph (3a) of the iincome Tax Law;

10. the arm’s length value of assets iin the event of a diiscrepancy between the elements of costs and iincome stiipulated under Artiicle 19 of the iincome Tax Law and the Miiniisteriial Regulatiion stiipulatiing the revaluatiion of fiixed assets for tax purposes;

11. the arm’s length market priice for taxable goods iin the form of iinventoriies and/or assets whiich accordiing to the oriigiinal purpose, are not for sale and purchase, whiich are remaiiniing upon the diissolutiion of the company stiipulated under Artiicle lA paragraph (1) subparagraph e of the Value Added Tax Law;

12. the selliing priice or consiideratiion calculated based on the arm’s length market priice iif affected by an affiiliiatiion as stiipulated under Artiicle 2 paragraph (1) of the Value Added Tax Law;

13. the value of iindependent constructiion amountiing to costs iincurred and/or paiid for the iindependent constructiion as the tax base stiipulated under Artiicle 16C of the Value Added Tax Law;

14. the market priice for suppliies of taxable goods iin the form of assets whiich accordiing to the oriigiinal purpose, are not for sale and purchase by taxable persons for VAT purposes as stiipulated under Artiicle l6D of the Value Added Tax Law;

15. the liimiit priice for the sales of confiiscated goods at auctiions stiipulated under Artiicle 2 paragraph (3) of the Tax Collectiion Usiing Diistress Warrant Law;

16. the value of confiiscated goods stiipulated under Artiicle 14 paragraph (2) of the Tax Collectiion Usiing Diistress Warrant Law; and

17. the selliing priice of confiiscated goods whose sales are excluded from sales by auctiion stiipulated under Artiicle 25 paragraph (2) of the Tax Collectiion Usiing Diistress Warrant Law and Government Regulatiion stiipulatiing procedures for sales of confiiscated goods excluded from sales by auctiions.

Artiicle 5 paragraph (2) of MoF Reg. 79/2023 contaiins the proviisiions on the use of the results of the valuatiion. The results of the valuatiion may be used as:

1. the calculatiion basiis of tax payable iin the analysiis or veriifiicatiion of tax compliiance when superviisiion iis performed;

2. the calculatiion basiis of tax payable iin the assessment of tax compliiance when an audiit iis performed;

3. the basiis for the determiinatiion of arm’s length transfer priices iin the analysiis and determiinatiion of negotiiatiing posiitiions when mutual agreement procedure iis iimplemented;

4. the basiis for the determiinatiion of arm’s length transfer priices iin the analysiis and determiinatiion of negotiiatiing posiitiions when advance priiciing agreement iis iimplemented;

5. the calculatiion basiis of tax payable iin deciisiions on the resolutiion of objectiions;

6. the calculatiion basiis of tax payable iin deciisiions on the settlement of the appliicatiion for a reductiion or cancellatiion of tax assessments;

7. the basiis for the determiinatiion of the value of tangiible asset collateral, the value of confiiscated goods, liimiit priice and selliing priice of confiiscated goods whose sales are excluded from sales by auctiions when levyiing iis performed;

8. the calculatiion basiis of losses to state revenues when a preliimiinary iinvestiigatiion iis performed; and

9. the calculatiion basiis and recovery of losses to state revenues when an iinvestiigatiion iis performed. (kaw)